Steps in the Financial Planning Process: What You Need to Know

We spend a lot of our lives planning, from trips and vacations to how to decorate the living room. But there’s one area you should be focusing on if you haven’t already, especially if you want a secure financial future: financial planning.

You may be thinking that financial planning is only for the very wealthy, but you’d be wrong. A financial plan can help anyone achieve their financial goals, both for now and for the future. If you’re interested in creating a financial plan, you should know a little about the process.

Certified financial planners (CFPs) practice according to guidelines set up by the Certified Financial Planner Board of Standards, following a code of ethics and standard practices. For most certified financial planners, getting a financial plan started for a client involves these main steps:

1. Identify Your Goals

The first step of any effective financial plan is to establish goals for yourself. Are you saving for retirement? Trying to pay down debt? Purchasing your first home? All of these can contribute to how you see your future finances and help you or your professional financial planner create a workable plan for you. 
If you do decide to work with a professional, this is also the stage at which you will establish your relationship. You will talk with your financial planner about your goals, financial views, and anything else that might be relevant to helping you achieve financial success.  It is important to have the eventual plan in writing, so that you have “a track to run on” so to speak, and so that changes can be made to the base plan over time, as your personal circumstances change.

2. Gather Data

Once you’ve established some goals, it’s time to gather data. This can include several aspects of both your personal and financial information. You’ll need to tally your income, expenditures, and any assets or liabilities so you or your financial advisor can get a good picture of the current state of your finances.

Additionally, this is a chance for you to better understand your feelings about investments and money management. What is your personal risk tolerance? What’s your policy on investments? All of this information will help you to rank your priorities appropriately, making it easier for you to decide where to allocate your funds.

3. Analyze the Data

After collecting all that data, it’s now time to analyze it and figure out what it means for your finances. For example, if you are planning on purchasing your first home, you can take a look at your current financial situation and the amount you are saving right now.

With a timeframe in mind, you can calculate the end amount you will have for your down payment. Is it enough? If your projections don’t show that you will meet your goals, you can make adjustments!

4. Develop the Plan

Now that all of these introductory steps are completed, it’s time to create an actual plan for your finances. If you are working with a professional financial planner, they will help devise solutions that can work best for achieving your own specific financial goals. The key point in this phase is the word ‘develop,’ since there will be adjustments required throughout this process. 
You will need to be able to adapt your plan depending on your individual situation. There are many options and numerous variables that must be considered, and not every strategy will work for every person. Make sure you leave room to keep your plan flexible as your needs change; that way, if your goals shift, you can adjust your plan accordingly. 

5. Implement and Monitor the Plan

Once your plan is all set and ready to go, it’s time to implement! For many people, putting a new financial plan into practice can be the most challenging aspect of the process. Like any new endeavor, it will take dedication and discipline, but the efforts will be well worth it as you get closer to your goals.

Additionally, it is important to remember that as you move through life, your situation (and therefore your goals) may change. Financial planning must include the monitoring of your finances and personal situations. Otherwise, you might not be getting the most out of your plan.

When working with most professional financial planners, monitoring and adjusting of your plan will be considered a standard part of their practice. But if you are working on your own, then you need to ensure that you make any necessary adjustments.

Whether you work on your own or with a professional, you can use these steps to help you create a financial plan that can work for you both right now and in your future. If you haven’t started planning for your financial future yet, get started today.


Robert Ryerson

Although Robert M. Ryerson completed all the necessary requirements to earn bachelor of arts degrees in both English and economics at Rutgers University, college policy at the time prohibited the issuance of dual degrees. As a result, he graduated from Rutgers with a single bachelor of arts in economics before finding employment as a stockbroker with Shearson Lehman American Express in New York City 1984. Robert M. Ryerson has since established himself as a respected estate administrator and legacy planner. In addition to his economics degree from Rutgers, Mr. Ryerson holds several professional designations including Retirement Income Certified Professional (RICP)®; Certified In Long Term Care (CLTC)®; Certified Financial Fiduciary (CFF)®, and Certified Identity Theft Risk Magenament Specialist (CITRMS)®. He has shared his knowledge on the subject of identity theft as the author of the book What’s The Deal With Identity Theft?: A Plain-English Look at Our Fastest Growing Crime. He has also covered identity theft issues directly for students as the instructor of the adult education course Understanding Identity Theft: Our Fastest Growing Crime.

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